10 Cheap Blue Chip Stocks to Buy According to Hedge Funds

3. Oracle Corporation (NYSE:ORCL)

Number of Hedge Fund Holders: 105

Forward P/E as of April 18: ~17.7x

Oracle Corporation (NYSE:ORCL) provides products and services addressing enterprise information technology environments. Morningstar expects annual revenue growth to consistently reach the low teens between fiscal 2026 and 2030, with the adoption of OCI and Oracle Cloud Applications increasing. Furthermore, cloud services and license support are expected to become critical growth drivers for Oracle Corporation (NYSE:ORCL). The firm also expects that the services segment can fare better with low-single-digit revenue growth, with customers relying on Oracle for data infrastructure consulting services.

Morningstar believes that its wide moat is being supported by increased switching costs. Database systems and other enterprise software that Oracle Corporation (NYSE:ORCL) sells remain important for the day-to-day operation of modern enterprises. Furthermore, companies tend to stay with the same vendor for years on the application side and even decades for core systems in a bid to ensure optimal business continuity, opines Morningstar. This is expected to keep Oracle Corporation (NYSE:ORCL)’s return on invested capital above its cost of capital over the upcoming 20 years, given that it is a critical player in such areas.

Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:

“Notable adds in the quarter included GE Vernova and Oracle Corporation (NYSE:ORCL). We believe Oracle is entering an interesting profit cycle as its faster growing business units become a larger percentage of the revenue mix. Most notably, Oracle Cloud Infrastructure (OCI) has undergone a significant product upgrade cycle that will enable it to be the primary incremental top-line growth driver. The company is winning new accounts due to its attractive pricing, flexibility and expanding geographic availability. Also, within its SaaS segment, we believe the company will benefit from the secular trend toward cloud computing. Oracle experiences a significant profit boost as it moves its lower margin on-premise database business to the cloud (through any cloud provider), which operates at higher margins. The company recently surprised investors by announcing a 2029 revenue target of $104 billion, which implies an acceleration in annual revenue growth to ~16% from the current ~9%–10%levels. Shares pulled back in the quarter, and we used it as a buying opportunity.”